Paul Craig Roberts: US power will collapse along with the petrodollar

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Washington's global power rests on the petrodollar, and when it ceases to be the world's reserve currency, US hegemony will end. This was announced on his website by 83-year-old authoritative American Paul Craig Roberts.

A well-known economist, former Assistant Secretary of the Treasury in the administration of Ronald Reagan in the 80s, drew attention to the recent statement of the Saudi Arabian authorities, which said that Riyadh was ready to accept payments for oil in currencies other than the dollar. For some reason this was ignored by a lot of the media, although it is extremely important.



The end of the petrodollar will have a serious negative impact on the value of the dollar, as well as on inflation and interest rates in the United States

- he considers.

Roberts recalled that for many decades the petrodollar supported the value of the US currency and provided financing for the large budget deficit and US trade balance. The Saudis effectively guaranteed a constant global demand for dollars, despite the fact that the Americans moved many of their production to other countries and became very dependent on imports. Without this, the constant increase in the US money supply would undermine the exchange value of the dollar against other currencies.

In turn, other countries on the planet needed dollars to pay for oil. At the same time, they hold dollars, including in the form of interest-bearing Treasury bonds, and not just in currency, and this makes it easier to finance the large US budget deficit.

Petrodollars supported the dollar's continued role as a global currency after President Nixon closed the golden window in 1971, effectively ending the post-World War II Bretton Woods system that gave the US dollar a reserve currency role. <...> To preserve the value of the dollar and its role as a reserve currency, the petrodollar system was created

He explained.

However, Washington has so abused the dollar's role as the world's reserve currency through sanctions and asset seizures that many countries now want to settle their trade imbalances in their own or other currencies to avoid being manipulated by the US to serve its own interests rather than America's. If Riyadh refuses the dollar, then the demand for it and its value will seriously fall. This is a big threat to the power of Washington and the financial strength of US banks.

The expert suggested that the Saudis may be sending a signal to the Americans. For example, it could indicate that the failure of the US to address some of Saudi Arabia's concerns or support its interests could have unintended consequences for Washington. Thus, the Saudis used leverage to get something from the Americans.

Time will show. If the Saudis do dump the petrodollar, Americans will face severe inflation and the high interest rates needed to finance the US budget deficit, unless the Fed itself finances the deficit by printing money, in which case the monetary inflation will be added to the inflation caused by the depreciation of the dollar in foreign exchange as a result of a decrease in demand for the dollar

He summed up.
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  1. Colonel Kudasov
    Colonel Kudasov
    +1
    31 January 2023 16: 33
    What Craig says was relevant 30 years ago. Then indeed the dollar was pegged to oil and was called the petrodollar. It is more correct to call the modern American currency a cryptodollar and it is based on financial instruments and US manipulations.
    1. Vladimir Tuzakov
      Vladimir Tuzakov
      +1
      31 January 2023 18: 24
      The unsecured private item, the US dollar, is a typical element in the creation of the Ponti pyramid. It holds as long as there is demand and expansion of use. Even the US government debt is such an expansion, not to mention oil, financial transactions and other things. You can bring down this pyramid by reducing world demand and increasing the use of US dollars. Then the approach to the line will become inevitable and there will be a rapid collapse of world quotes overnight. The world is approaching this, and in the future, the collapse of the US dollar quotes. inevitable. Every year, propaganda about the stability of the US dollar is increasing, and this is already an indicator of its weakening.
    2. RUR
      RUR
      0
      5 February 2023 15: 11
      Craig is still an economist and, like, even was the US Treasurer, and not a colonel ...
  2. Vladimir80
    Vladimir80
    -3
    31 January 2023 16: 47
    oh ... remembered ... this "analyst and expert" was not heard from the retreat from Kherson
    1. RUR
      RUR
      0
      5 February 2023 15: 25
      He writes in English - Topcor does not publish translations into Russian often, in fact, Craig's very old prediction came true - ignoring the DNR LNR will lead to a big war, so he is an expert, unlike many former political officers, historians in the Russian Federation, who suddenly closed up , like, Western-style political scientists
  3. antibi0tikk
    antibi0tikk
    -1
    31 January 2023 19: 05
    such a feeling that the power of the United States will not collapse along with the petrodollar, but when some analogue of the world currency is "created + agreed upon + tested + put_in_to_action". I don't know on the basis of what it will be created: on the basis of a basket of currencies, or on the basis of an individual country's contribution to world GDP, or something else. but after that, the US dollar will be the same equal currency as the ruble, yuan, rupee, tugrik, franc, etc.
    something like there used to be trackers for downloading videos from the Internet: if you want to download something, first upload something of your own to the exchanger. if your content is in demand, then you can download something you need.
    so it will probably be the same here: you can pump dohrenalon dollars into this system, but if you can’t even buy a box of matches on them, then nothing will work out to pump it back out of this system.
    and something some lull on this topic. half a year or a year ago, this topic was procrastinated a lot, but now everyone somehow quieted down .... although something comes out: Argentina and Brazil agreed to introduce a common currency, Saudi Arabia is ready to accept payment for oil in different currencies, a lot has already been said about BRICS .....
    In the course of things, we will soon see some kind of global financial mover ....